Thursday, June 21, 2012

Windows 8 Phone Software to Rival Google

Microsoft Corp. (MSFT) (MSFT), the world’s largest software maker, will release a new version of the Windows Phone program in handsets this fall, part of a broad effort to gain ground against Apple Inc. and Google Inc. (GOOG) (GOOG) in mobile devices.

Windows Phone 8 has the same core software as the new Windows 8 operating system for personal computers and tablets, meaning it can be used in a variety of phone models at different prices, the company said at an event in San Francisco today.

Microsoft finished the first quarter with a 2.2 percent share of the mobile-phone operating system market, dwarfed by Apple’s iOS and Google’s Android software, according to researcher IDC. Along with the unveiling earlier this week of its own tablet computer, called Surface, the Redmond, Washington-based company is stepping up its challenge as consumers rely more on mobile-computing devices.

“Windows Phone 8 is a significant improvement,” said Al Hilwa, an analyst at IDC. “It brings the capabilities up to par with Android. The question of whether this pace of research and development is fast enough remains, because of the sheer velocity with which Android is moving.”

Android was the smartphone market leader in the first quarter, with a 59 percent share, and Apple (AAPL) (AAPL) followed with 23 percent, IDC said. Symbian software from Nokia Oyj (NOK1V), the Finnish handset maker Microsoft teamed up with last year to create new smartphones running Windows, trailed in third place with a 6.8 percent slice.

Nokia’s Woes

The new software comes as Nokia, Microsoft’s closest ally in the smartphone market, faces mounting losses and debt downgrades as it tries to remake its business around Windows Phone. Handsets with the new software will be made by Nokia, as well as Huawei Technologies Co., HTC Corp. and Samsung Electronics Co.

“Microsoft needs a healthy Nokia,” Hilwa said. “One can argue there are other hardware makers working on Windows Phone, but if Nokia goes down it will make the other hardware makers feel, ‘Windows Phone isn’t a platform we want to absorb.’ Everyone is watching how Nokia does.”

Windows Phone 8 software will run on phones with dual-core chips and high-definition screens, Microsoft said. Chips will be made by Qualcomm Inc. (QCOM) (QCOM), the same as with earlier Windows Phones.

Microsoft shares rose less than 1 percent to $30.81 at 2:57 p.m. in New York. The stock has gained 19 percent this year.

Digital Wallets

Microsoft’s software will support near-field communication technology, which lets customers use phones to make payments. It will have a digital wallet that can store coupons and frequent flier miles and pay for goods, said Joe Belfiore, a Microsoft vice president. The company is working with France Telecom SA’s Orange mobile-phone unit to adopt the wallet features and plans to add more mobile carriers in the future.

Users will be able to store credit card and other payment details and get deals through the wallet, as long as the companies involved and customers’ banks create applications and support for the wallet. The NFC feature will also enable customers to share content between phones, tablets and laptops with NFC.

Belfiore also showed the software’s new start-screen design, calling it the “sexiest thing” in Windows Phone 8. The design lets users do more to customize the program’s Live Tiles, which automatically update with new information from a user’s programs and contacts. Live Tiles are “the heart and soul of our product,” he said.

Microsoft will switch from its own Bing Maps and instead use Nokia’s mapping software in the new program. Windows Phone will also get Zynga Inc. (ZNGA) (ZNGA)’s gaming apps “Words With Friends” and “Draw Something” later this year.

Current Windows Phone users won’t be able to upgrade to the new software, unlike with previous versions, which were rolled out to all Windows Phones. Instead, a subset of the features, like the new start screen design, will be available as Windows Phone 7.8 for owners of current devices like Nokia’s Lumia 900.